Two Brothers Charged With COVID Relief Fraud | USAO-WDNY

CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX #: (716) 551-3051

BUFFALO, NY – U.S. Attorney James P. Kennedy, Jr. and Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division announced today that two brothers were arrested and charged by criminal complaint with wire fraud conspiracy for their alleged participation in a scheme to file fraudulent loan applications seeking nearly $7,000,000 in forgivable Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Larry Jordan, 42, of Lancaster, NY, and Sutukh El, a/k/a Curtis Jordan, a/k/a Hugo Hurt, 38, of Buffalo, NY, face 20 years in prison and a $250,000 fine if convicted.

The complaint alleges that Larry Jordan and Sutukh El conspired to and did submit at least eight fraudulent loan applications in an attempt to obtain nearly $7,000,000 for their company, 5 Stems Inc. In support of the fraudulent loan applications, Larry Jordan and Sutukh El allegedly made numerous false and misleading statements about the companies’ respective business operations and payroll expenses.

The complaint further alleges that the fraudulent loan applications were supported by fake documents, including falsified federal tax filings. For example, included in one application was a fraudulent IRS filing that appeared to be the company’s 2019 federal unemployment tax return (FUTA) showing that the company paid nearly $3,300,000 in employee wages that year. In reality, the IRS has no record of such a filing.

In addition, Larry Jordan and Sutukh El are accused of using fraudulently obtained loan proceeds on what appear to be personal expenses, including the purchase of securities, home improvements, and a vehicle. To date, the government has seized more than $400,000 of the more than $600,000 that Larry Jordan and Sutukh El obtained in their alleged fraud. 

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted March 29, 2020. It is designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding.

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of one percent. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.

This case was investigated by the Federal Deposit Insurance Corporation’s Office of Inspector General, the Board of Governors of the Federal Reserve System and the Bureau of Consumer Financial Protection’s Office of the Inspector General, the Federal Housing Finance Agency’s Office of the Inspector General, the Federal Bureau of Investigation, and the Small Business Administration’s Office of Inspector General. Trial Attorney Della Sentilles of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Charles Kruly and Grace Carducci for the Western District of New York are prosecuting the case.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

The fact that a defendant has been charged with a crime is merely an accusation and a defendant is presumed innocent until and unless proven guilty.

# # # #

Source link

Author: Editor
Website is owned by STL.News, LLC. However, website is hosted, designed and maintained by WebTech Group, a web host, and design agency based in St. Louis, Missouri. USDOJ.Today focuses on aggregating content from the US Attorney's Offices around the country. STL.News uses this content to publish national news at www.STL.News.